Arriving for a meeting before commencing their afternoon shift, around 25 timber workers appeared glum and confused as they waited outside the mill's entrance fearing for the security of their jobs.

Gunns employs about 280 workers at mills in Tarpeena and Kalangadoo, as well as another 320 in Tasmania, all of which are facing uncertainty after banks withdrew their support for the company which is in huge debt.

Its banks, including ANZ, have refused to extend more than $500 million worth of loans.

Construction Forestry Mining Energy Union (CFMEU) representative, Brad Coates, says timber workers in the South East are looking for answers.

"There's an air of confusion and disappointment and anger and all those emotions you have when news comes that is not very good.

"Gunns being placed in administration was not good news, but we haven't been able to find out really what's been going on, that's been part of the problem is that receiver managers haven't been appointed yet.

"At this stage the company will continue to operate and trade-on but until we sit down with the receivers managers to try and guarantee entitlements and wages, we're not quite sure what's going to happen," he said.

Timber workers in shock

And while the future of Gunns has been in contention for more than six months after trading was frozen, Mr Coates says the news still came as a shock.

"It's come as a shock being today because as late as last week we were led to believe that a sale was imminent, in fact I think the words were 95 per cent done.

"We were quite confident that sale was going to have some continuity for our members, however the ANZ bank has decided to withdraw their support," he said.

At the moment, workers are waiting-on receiver managers to be appointed before any more details are revealed.

Speaking from the Tarpeena mill, Mr Coates called on the South Australian government to take action.

"If the state government doesn't realise there are some inherent problems at the moment, like log prices and overseas imports, they can't bury their heads in the sand, they need to make some decisions because losing 200 jobs in this site and perhaps another 500 at Carter Holt Harvey would be absolutely catastrophic for this region.

"It's like the perfect storm, everywhere you go at the moment there's bad news in the timber industry, the community is in a really depressed state and we need the government, both state and federal, to show some leadership and fix some of these problems up," he said.

State government to the rescue

South Australian Treasurer Jack Snelling told ABC News his government is investigating what can be done to safeguard at least 160 jobs at the Gunns' timber mill at Tarpeena.

He says part of a $27 million taxpayer package rejected by timber company Carter Holt Harvey could be re-directed to help Gunns' workers.

"The Government's very mindful of the importance of the milling industry to the South East.

"We want to make sure those jobs are protected so we're looking at a package basically of assistance."